First: two new lower-level squid players drops have been added. In quest-centric zones, even!

Second: squid players now come with an effectiveness rating, which is the percentage of XP they return from your squid discs. Bottom end of the range is currently 80%, top end is 110%. The item description will tell you the effectiveness.

Third: the game automatically checks everything you're wearing plus everything in your inventory (but not storage or deep storage) and picks the best quality item that you are high enough level to use, and gives you those returns. So you don't have to have the item equipped, and if you've got a low-quality one equipped and a better one in your inventory, it'll still pick the best one.

Prestige wrote:We now need to meet the level requirement for the player itself in order to play discs with it, which I believe was not the case before.

Originally, it was. You had to actually equip the item to play discs. This was later changed for convenience, and eventually led to discs having level requirements to keep level 6 characters from using Noctuaries.

Also, as Ryme mentioned, there's two new players put into the game that should help lessen the hit.

The churches are empty / The priest has gone home / And we are left standing / Together alone--October Project: "Dark Time"

SQUID player (from the black market) is at 100%, which means it's the same as it ever was.

Seppia's Skullcap and the Eye Podule are at 110%, which means they're better than before.

The two new players that were added to the game are less than 100%, which means they aren't as good as the other, but since they never existed until now, it's hard to call them nerfed. Furthermore, they actually drop in lower level, quest-related zones, which is a huge boon, even if they were 50%.

The churches are empty / The priest has gone home / And we are left standing / Together alone--October Project: "Dark Time"